Psychosizing is a form of market analysis where the size of the market is guessed based on the targeted segments’ psychographics. In that respect, according to psychosizing analysis, we have five types of markets: microniches, niches, markets, vertical markets, and horizontal markets. Each will be shaped by the characteristics of the underlying main customer type.
Introducing the Psychosizing Market Analysis
Mapping the existing context or the potential context a company’s business model is developed into, is critical. Your market type will be the initial box where your company will operate. It will also be the foundation to move to larger markets, that can develop as a result of wider adoption (market development) or as a result of you taking more space within that existing market (market expansion).
Types of markets in Psychosizing
In traditional economics terms markets can be broken down in four main types as shown below:
However, for the sake of psychosizing we want to understand how big might be the market based on the main customer types. For the sake of it, we’ll draw into the technology adoption curve, to understand the main types of customers we might have in a tech-driven economy.
Innovators are the first to take action and adopt a product, even though that might be buggy. Those people are willing to take the risk, and those will be the people ready to help you shape your product when that is not perfect. Innovators usually represent a small niche, what we can call a microniche.
Early adopters are among those people ready to try out a product at an early stage. They don’t need you to explain why they should use that innovation. The early adopter has already researched it, and she is passionate about the innovation behind that. In this case, early adopters will help you take advantage of a larger subset of a market, a niche.
The early majority is the psychographic profile made of people that will help you “cross the chasm.” Here you move past the niche and enter into a more developed market, still small but yet with a defined customer type that goes beyond the innovator and the early adopter.
The late majority kicks in only after a product is well established and it has a more skeptical approach to technological innovation and it feels more comfortable in the adoption only when a product has gone mainstream. In this case, you might be able to draw into a larger market, even though still mostly vertical. This means that there is still a primary customer type driving that market and a primary commercial use case.
Laggards are the last in the technology adoption cycle. While the late majority is skeptical of technological innovation, the laggard is adverse to it, unless there is a clear, established advantage in using a technology those people will hardly become adopters. Here the market size will have achieved its highest in terms of potential size, and you might be able to draw into a horizontal market, able to adapt to many commercial use cases and many potential customer types.
We can analyze the market by using various psychographics and determine the potential market size. This model is a simplification of how real markets look like and only useful to understand the existing potential of a company’s business model a define a clear short-term strategy.